Combining the two airlines has benefits for both companies, if the terms can be worked out.

For Carnival Air, the plus is access to public equity markets. It has been angling for some time to go public and merging would short-circuit that laborious and expensive process.

For the new Pan Am, the merger would let it grow from a tadpole to a frog in one quick step. It started service last fall with just three jets and has faced a difficult growth path in the aftermath of ValuJet Flight 592's crash into the Everglades.

Carnival, based in Dania, offers a nine-year operating history, 1,600 employees and 25 jets. Its flights connect the Northeast to Florida and the Caribbean.

When the deal fell through in August, the issue was price. After looking at Carnival's books, Pan Am revised its $100 million offer and upset the negotiations.

At the time, Pan Am was still waiting permission from the U.S. Department of Transportation to begin flights. It has since launched its service, which now connects five cities with 18 daily flights and provides employment for about 450 people.

Stuart Klaskin, an aviation analyst with Klaskin, Kushner & Co., in Coral Gables, said the deal has a greater chance to succeed than it did in the past.

"It's a much better deal for both parties now," he said.

"Before, Pan Am was a figment of Marty Shugrue's mind. Now it's a very different thing. Pan Am is flying, they're competing with Carnival over several routes and they're kind of beating up on each other," Klaskin said.

Pan Am had once flown worldwide, but declared bankruptcy and stopped flying in 1991. Developer Charles Cobb bought the rights to the name from the bankruptcy estate for $3 million.

Cobb brought in Martin Shugrue, a former Pan Am executive and trustee of Eastern Airlines, to run the operation. They sold part of the company to Boca Raton based Frost Hanna Mergers Group for $10 million.

Carnival Air, founded in 1988, is owned by Micky Arison, who also owns the Miami Heat basketball team, and through family trusts has a controlling interest in cruise leader Carnival Corp.